Starting and Managing Businesses - Essay Example

Prof: Starting and Managing Businesses Start-up businesses play a huge role in the economy of countries and most people enterthe world of business through small or medium sized companies. Most successful companies today, like Wal-Mart, Apple Computers, Microsoft, and eBay, were at one time someone’s idea. Business ideas eventually become real businesses. During the inception stages, the companies that people look up to as ideal companies had little or no influence in their markets. A company such as Apple had fewer than fifty employees at the time it was starting up, but today, it is one of the biggest technology giants with thousands of people as its employees. Thousands of entrepreneurs out there seek to start businesses every year. However, not all turn out to be successful. On the other hand, managing post-start-up venture is also challenging, and it calls for special strategies to move to the expansion level. This paper assesses the processes that entrepreneurs should go through in developing pre-start-up ventures and managing post-start-up ventures. Considerations for Pre-Start-ups Start-up Choices Before starting a business, a would-be entrepreneur should consider several things that will ensure that he or she is ready for it. It is advisable to search deep within one’s heart to ascertain whether starting a business is a good idea or not. This decision is essential in the business world, especially start-up businesses, is flaunted with numerous challenges. Becoming an entrepreneur calls for courage and sacrifice, at least in the initial stages. If someone is not ready to leave a permanent or secure job and start a venture that will drain resources including time, then the decision to go into business may be regrettable. The working hours in a start-up are sure to be more as compared to an established company. On the other hand, the pay is most probably lower as money is in short supply during the initial stages (Cohan, 13). At this point, a small quiz on whether one is ready to be an entrepreneur can help in highlighting the readiness of a person (Wicks, 5). Successful start-up entrepreneurs, according to Cohan (13), are born hungry. This hunger is their demand for money, and it exceeds their supply of the same. This stands as a powerful emotional lodestone that draws in aptitude. For this reason, successful entrepreneurs have the courage to leave permanent positions in well-established companies to grapple with start-up businesses. These entrepreneurs defer short-term financial benefits and comforts in exchange for a meaningful cause with the probability of a bigger and long-term payout. Of course, this means that entrepreneurs not only have to make the choice themselves but they also have to persuade others to leave whatever they are doing and join them. They must also be able to coax capital providers to invest in their ventures (Cohan, 13). More than any other thing, entrepreneurs have to look for capital resources. Investors, on the other hand, look for ways to generate large returns by financing start-ups that seem to be promising (Timmons et al., 30). Viability of Business Idea Creating and sustaining a business idea is fraught with myriad challenges. To overcome these challenges, entrepreneurs must consider some key things. First, they should have knowledge regarding the business they want to open. This calls for thorough research on the services, products, and market related to the business. Other businesses that have a proven record of accomplishment can also be good sources of information to entrepreneurs. Next, entrepreneurs should ensure they have all the required skills to start and run the business. Besides having a business idea, entrepreneurs ought to know the amount of money they need. This also applies to post-start-up ventures, as the entrepreneurs may have to buy them. The business idea in question should also be interesting, and entrepreneurs ought to think of things they are passionate about (Wicks, 10). It is imperative to determine if the business idea epitomizes a good prospect. Many entrepreneurs have business ideas regarding services or products that appear as winners. However, just because a business idea appears great does not imply that it represents a good opportunity. An entrepreneur who is obsessed with a business idea tends to undervalue the exertion of creating market interest in that business idea. To present as a good opportunity worth investing in, a business idea must meet actual market demands and persuade buyers of its benefits. Many benchmarks exist for measuring whether a start-up idea is a good opportunity for investment. Some of the fundamental requirements that entrepreneurs ought to consider include market factors, competitive advantage, economics, management capability, and possible flaws (Longenecker, 28–29). Mission and Goals Mission stands as the entrepreneur’s most convincing case for why the business will achieve immensity. At the centre of this need is a fervently held credence that the aspirations of the start-up are important (Cohan, 15). Entrepreneurs need to have clear visions that show where they intend the business to go for them to be successful. In other words, it is essential for a business to establish its intended destination and purpose. Developing a mission statement serves as a perfect tool to define the values, activities, and purpose of a business. The mission statement stands as the lighthouse of a business. In case a company loses track, it can look back on its mission statement and remember its overall purpose. Mission statements remind employees of a business as well as its consumers the direction and purpose of a business. What is more, the mission statement of the business serves as a foundation to developing a culture integrated with the purpose of the business (Way, 1). Start-ups that do not have goals put themselves at risk of running into failure. Too many start-ups fail due to failing to define appropriate missions in time. Fleshing goals after a business has started is a big mistake (Chima, 1). There is a high chance that entrepreneurs may fail to develop a good strategic plan that details, among other things, the objectives and goals of a business. Strategic plans allow businesses to mitigate problems and make decisions aimed at meeting the set objectives and goals. Lacking clear goals and objectives leaves businesses to guess on important things. In developing goals and objectives, businesses should consider being specific. Furthermore, start-up businesses ought to set realistic goals that are achievable within three years (Sullivan, 73). Growing Existing Businesses Innovation Innovation is a key element that should be present in businesses. Innovation involves the development of new products, services, and processes. It also implies the incorporation of existing inventions and technologies to create new products and systems and to improve existing ones (Raichaudhuri, 5). This means that both start-up and existing businesses have a mandate to innovate to appeal to consumers and stay competitive. Innovation is more common with new ventures since they have to strive to present new products and services that will appeal to consumers. However, innovation is a proven technique to grow businesses and post-start-up businesses have to innovate to stay competitive. Nothing can increase the popularity of small businesses like an announcement that it will be launching some innovative product or a different way of providing services (Blanchard, 174). However, innovation is not an easy ticket to success or wealth creation as the media popularly flaunts it. Instead, a slow and incremental process subsumes small changes that take place in a business over time (Blanchard, 177). In addition to that, businesses should never be too absorbed with innovation that they forget the market potential of their products and services (Timmons et al., 123). Building Relationships A key difference between new pre-start-up and post-start-up ventures is that existing businesses have to build relationships. Averagely, a good business should be able to maintain 70 to 90 percent of its consumers every year. Attracting new consumers is costly for businesses necessitating that they do all they can to retain existing consumers. Moreover, new consumers do not buy as much as loyal ones do and when they do, they do not go for expensive products. On the other hand, loyal consumers draw their friends to buy products and receive services from businesses. Experts posit that businesses that increase the retention rate of their consumers by a mere 5 percent see their profits grow by almost 80 percent. Because building relationships is so important to post-start-up businesses, they should do so effectively (Longenecker et al., 409). Venture Capital Existing businesses have a bigger advantage than start-ups or businesses that are still on the planning stage. Firms that offer venture capital prefer to put their bets in firms that seem more tangible than mere concepts of entrepreneurs (Harper, 356). The lifeblood behind the processes of venture capital subsumes three main parts: entrepreneurial contracts, investments in the contracts, and output from the investments. When businesses make high returns, fresh capital flows into the investments, and, so long as the contracts maintain their pace, businesses do well. However, at times, things go out of proportion and the flow of fresh capital fall below expectations making businesses despondent. Several things affect the flow of venture capital such capital markets, technologies, government policies, entrepreneurs, contracts, and investors (Bygrave and Timmons, 262). Venture capital also serves as important in ensuring there is economic growth as it provides resources and investment needed by small and growing businesses. In Canada, many businesses profited from venture capital at the critical stages of their growth. OpenText, Blackberry, and Sierra Wireless are some of the businesses that grew exponentially after receiving the support from the sustainable industry, venture capital. Countries and businesses need venture capital to support businesses that have a lot of potential for growth. Venture capital is also essential to countries as it ensures that firms grow to be internationally competitive and create jobs while undergoing growth. Consequently, venture capital ensures that businesses and countries are innovative and economically stable. While venture capital is beneficial for countries and start-ups, the industry faces myriad challenges emanating from several fronts. Low returns are also discouraging and limits the capital that businesses access (Bygrave and Timmons, 263). Policies Once a business grows and employs tens of workers, it should consider developing a policy book. Policy books detail behaviour patterns that are acceptable in a place of work and should target staff and managers alike. Businesses that have well-written policies survive legal claims presented by employees. An attorney should guide a business in developing and reviewing a policy book. Importantly, entrepreneurs should remember that the guidelines in the handbooks require them to meet some things as well. Courts usually see policy books as contracts that bind employees and employers. While policy books are there to protect a business from any damage during its growth, numerous employees have won suits against their employers because managers did not honour conditions in the books (Adams, 263). Moreover, businesses, both pre and post-start-up, ought to follow policies and regulations for smooth running with the administrative systems. Conclusion This essay shows that entrepreneurship calls for dedication and commitment. Entrepreneurs become successful if they are commitment from the word go. Besides commitment, start-up businesses require special strategies to succeed. Thousands start businesses, but it only those who use special strategies and follow due processes see success. After starting up a business, post-start-ups also need to be proactive to survive and grow. Innovation of the products should be slow but incremental and capital should always be present to ensure there is an expansion. Finally, businesses need to follow policies and regulations to ensure that they meet administrative requirements and that the associations of employees do not interfere with the operations of the business. Works cited Adams, Bob. Streetwise Small Business Start-up. Adams Media, 1996. Print. Blanchard, Ralph. Creating Wealth with a Small Business. iUniverse, 2011. Print. Bygrave, William D., and Jeffry A. Timmons. Venture Capital at the Crossroads. Harvard Business Press, 1992. Print. Chima, Chikodi. ‘Start-ups Without Goals Plan To Fail’. N. p., 14 July 2013. Web. 11 Mar. 2014. Cohan, Peter S. Hungry Start-Up Strategy: Creating New Ventures with Limited Resources and Unlimited Vision. Berrett-Koehler Publishers, 2012. Print. Harper, Stephen C. Extraordinary Entrepreneurship: The Professional’s Guide to Starting an Exceptional Enterprise. John Wiley & Sons, 2005. Print. Longenecker, Justin et al. Small Business Management: Launching and Growing Entrepreneurial Ventures. Cengage Learning, 2011. Print. ---. Small Business Management: Launching and Growing New Ventures. Cengage Learning, 2009. Print. RAICHAUDHURI, ANJAN. MANAGING NEW VENTURES: CONCEPTS AND CASES IN ENTREPRENEURSHIP. PHI Learning Pvt. Ltd., 2010. Print. Sullivan, Robert. The Small Business Start-up Guide. Information International, 2000. Print. Timmons, Michael B. et al. The Entrepreneurial Engineer: How to Create Value from Ideas. Cambridge University Press, 2013. Print. Way, Allison. ‘The Importance of a Mission Statement for Entrepreneurs, Start-ups and Small Biz’. Kansas City Entrepreneurship. N. p., 26 Oct. 2011. Web. 11 Mar. 2014. Wicks, Mike. Starting a Business 101. Vol. 101. Victoria: Blue Beetle Books, 2012. Print.  Read More